Market Monitor - Focus on the steel industry - Turkey


  • Türkei
  • Stahl

01 09 2014

Despite a drop in output of 3.4 % to 34.65 million tons, Turkey kept its position as the world’s 8th largest steel producer.


  • Lower net profitability
  • A good payment and insolvency record
  • Our underwriting stance remains open

Turkey’s crude steel production capacity reached 49.6 million tons in 2013: a 1.2% increase from 49.04 million tons in 2012. Despite a drop in output of 3.4 % to 34.65 million tons, Turkey kept its position as the world’s 8th largest steel producer. The industry was helped by the rebound of steel-using sectors in the European Union, as Turkish steel export volumes increased 30%, to 3.3 million tons. In 2014 Turkey’s crude steel production is expected to increase 8%, to 37.4 million tons, while exports should increase at the same rate, to 20.5 million tons.

In 2013, margins in the steel sector continued to improve, thanks to robust demand and higher prices. However, net profitability decreased as foreign exchange losses resulted from the volatility of the Turkish lira. The industry’s general equity strength, solvency and liquidity indicators are traditionally robust. Overall indebtedness in the sector is average, and banks are still willing to provide credit.

On average, payments in the Turkish steel and metals industry take 60 days and we do not expect any increase in payment delays in the coming months. The industry’s non-performing loans/total loans ratio was 1.6% in 2013 and, compared to other Turkish industries, its default and insolvency records are good, with the low rate of business failures expected to remain unchanged for the rest of the year.

Therefore, as in 2012 and 2013, we have an open underwriting stance towards this industry, although we are more cautious with small and medium sized enterprises, especially in the flat steel production subsector, as they represent higher risk.

Our main criteria for assessing credit limit applications are shareholder structure, equity level and cash position. For new buyers we look at elements in their payment behaviour such as bounced cheques or protested bills.

If no financial information is available on buyers, we still aim to approve small credit limits based on length of time in business, capital and payment behaviour. However, to maximise cover we contact the buyers, banks and information agencies for additional financial information. Our customers can help in such cases, through their close relations with buyers. If, with all the available information, we still have to restrict cover, we will of course explain our decision to our customer.


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